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STRATEGIC MARKETING MANAGEMENT - ADIDAS

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Contents

Introduction to Adidas .................................................................................................................................. 3

A.C. 1.1 Role of strategic & tactical marketing in Adidas .......................................................................... 4

A.C. 1.2 Processes involved in implementing a marketing strategy within Adidas .................................. 4

A.C. 1.3 Evaluation of links between strategic marketing & corporate strategy within Adidas ............... 5

TASK 2: .......................................................................................................................................................... 7

A.C. 2.1 Key theoretical models used in strategic marketing planning by Adidas .................................... 7

A.C. 2.2 Implementation of strategic positioning through a range of marketing tactics used by Adidas 7

A.C. 2.3 Relationship marketing activities implemented by Adidas & evaluation of success of these

activities .................................................................................................................................................... 8

TASK 3: .......................................................................................................................................................... 9

A.C.3.1 Growth opportunity for Adidas using appropriate marketing techniques .................................. 9

A.C. 3.2 Suitable marketing strategies for the selected market ............................................................... 9

A.C. 3.3 Appropriate strategic marketing objectives for the new market & a marketing mix to achieve

this objective ........................................................................................................................................... 10

TASK 4: ........................................................................................................................................................ 11

A.C 4.1 Major changes that have occurred in external environment & assessment of their impact on

the marketing strategy of Adidas............................................................................................................ 11

A.C. 4.2 Analysis of the Adidas’ current marketing strategy & its strengths and weaknesses ............... 11

A.C. 4.3 Key emerging themes that can affect the Adidas’ marketing strategy & responses to

effectively address these changes .......................................................................................................... 12

Conclusion ................................................................................................................................................... 13

Bibliography ................................................................................................................................................ 14


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Introduction to Adidas

Adidas is the German multinational which designs and produces sports shoes, apparel, and

accessories. The headquarters of this corporation is based in Herzogenaurach, Bavaria. Adidas

is the largest manufacturer of sportswear in Europe and the second largest across the world as

mentioned in the company’s website (Adidas 2016). The company products and designs feature

three parallel bars with an un-capitalized brand name.


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TASK1:

A.C. 1.1 Role of strategic & tactical marketing in Adidas

According to Miller (2004, pp. 4-5) strategic and tactical marketing are two different concepts.

Strategic comes first when a company is designing its brand and marketing plan to create a

marketing position. After the strategic marketing comes to the tactical planning, these are more

concerned with the planning of the actual activities for enhancing the marketing position and

portray the brand image.

Adidas signed Lionel Messi to leverage the new line of product and the market with a belief that

he is the ideal vehicle for promotion (Adidas 2016). To make the shoes more recognizable they

differentiated the footwear with those stripes which can be easily identified with on the side of

the shoes with different color themes. Adidas has a global approach with a primary focus on

football however as per the website (Adidas 2016); Adidas has signed other stars belonging to

different sports as well but their main emphasis remains with clubs and athletes as compared to

other sportswear companies.

Then, in the end, it all comes down to the actual performance of the sneakers. The company

made them be very comfortable and light weight and this made the sales score high. As

mentioned in the paper by Borowski (2013, pp. 23-27) Adidas developed a strategy to make

unique and recognizable product line and then executed the idea by signing the stars from

different sports and associate them with each of the product line, this is how they have

differentiated and have been consistent in sales with effective performing products with

recognizable value of the product.

A.C. 1.2 Processes involved in implementing a marketing strategy

within Adidas

Borowski (2013, pp. 12-14) says that Adidas executes the marketing strategy by assessing the

current situation of the market. Prior to any decision making the company carries out internal

and external evaluations so that all highs and lows can be addressed. These analyses are very

important for any firm as there are a lot of expenses associated with these practices and they

are almost irreversible.

For Adidas, first, comes to the development of marketing strategy and to identify what is

required by the organization to achieve its marketing motives as described by Carbasho in her


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work(2010, pp. 43-50). The company identifies how it can show the customers what are they

selling and how is it different from the rest and how can the customers extract the benefits out of

this new product. Next, comes, the assessment of internal and external trends. For example, in

accordance with Shaw and his work (2012, pp. 31-33) the internal need of Adidas is to capture

a market segment by introducing a new line of sneakers completely made out of ocean plastic

and the external need is to identify the presence of competitor products within the market and

their features.

Then comes value assigning to the outcome of this process and Adidas does it by evaluating

the profit levels of each of the optional strategies for a specific time period. This is very

important because sometimes the overflowing operational costs can jeopardize the whole

project. Adidas then chooses the strategy that goes well with the company motives and chooses

it for further implementation plans as explained by Miller (2004, pp. 9-12).

A.C. 1.3 Evaluation of links between strategic marketing & corporate

strategy within Adidas

First, we need to know what’s the difference between strategic marketing and corporate strategy

is. According to Smit (2008, p. 52) strategic marketing is related with creation of long-term plans

for performance and gaining a competitive advantage by satisfying the market demands by

keeping in mind the expectations of the stakeholders as well. Corporate strategy assesses the

current and the future factors associated with customers and competitors. Here the role of the

firm is identified while keeping in mind the resources and supporting policies to achieve the set

targets.

As per the corporate website (Reebok 2016) within Adidas, marketing, and corporate strategies

are interlinked with each other as the marketing strategies are considered as their corporate

strategies. This similarity makes it easier for the firm to align the promotional activities with

overall processes. Adidas deals in value generating products for the customers and generation

of value is the main ideology behind their manufactured products hence, the company’s

marketing plan becomes their corporate strategy.

The added advantage here is, this simplifies the resource allocation process for Adidas because

they can don’t need to invest time and energy, separately. By making the marketing strategies

their corporate plan has enabled them to emphasize more on delivering value to the customers

plus creating the footwear that delivers high performance and excellent image. As illustrated by


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Wilson (2010, pp. 23-32) Adidas infused its marketing strategy with the corporate objective to

make the process simpler so that it can focus on serving the market efficiently.


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TASK 2:

A.C. 2.1 Key theoretical models used in strategic marketing planning

by Adidas

As per Ojeda-Gomez et al. (2007, pp. 289-291) strategic planning process is crucial for any

organization and involves a combination of different models as no single model is ideal for any

firm. Adidas uses SWOT Analysis to provide execution to its plans by analyzing its Strengths,

Weaknesses, Opportunities and Threats, however; it is hard to complete the analysis with

accuracy.

Strengths and weaknesses are linked with the internal setup while opportunities and threats are

bonded with the external environment. Adidas chooses this strategy before it launches any new

product line and uses practical factors within this analysis which makes it more action oriented.

All of the intelligence linked to execution and implementation makes it compact and highlights

the action part instead of mere speculation as mentioned in the work of Palmatier et al. (2006,

pp. 136-139). This enables Adidas to recognize its current status within the market and the

opportunity that needs to be addressed.

Explained by Zeithaml et al. (2010, pp. 109-112) Blue Ocean Model is another strategic

marketing model that is used by Adidas in its strategic marketing planning process. As per this

model a firm should look into various factors linked with the industry and take actions

accordingly. For instance, Adidas with the launch of its new line made from ocean plastic are

trying to achieve the same by thinking out of the box and avoided the competition altogether.

This is for the consumers who are ‘Green’ and prefer to buy recycled products.

A.C. 2.2 Implementation of strategic positioning through a range of

marketing tactics used by Adidas

The ideas that Adidas conveys to its customers are the same to what it communicates to its

employees which smoothen the daily tactical decisions making process and make it easier to

tackle during the time when strategic plans are put into operations. In accordance with Wilson

(2010, pp. 83-84) the company’s management has to be crystals clear and concise because as

they must be consistent in order to achieve their motives. The daily attainment of objectives can

very easily fade out within the employees while the customers’ taste can also change over time.


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Among the customer around the globe, Adidas has positioned itself in such a manner that it is a

brand that focuses performance and this allows the customers to link Adidas with their practices

and achievements. As per Miller (2004, pp. 215-219) products positioning drives marketing

tactics and strategies as it helps in creating and identifying the target market. It is actually done

with the minds of the prospective customers, not with the actual products itself. The market

where you will find such a prospect must also be recognized in order to be more influential. To

achieve this Adidas does market segmentation, where it identifies various customer groups with

matching buying habits and needs. Then in accordance with Carbasho (2010, pp. 108-109) after

this Adidas targets the customers by identifying the group most likely to buy the new product

line and creates a brand image focusing on their demands and Adidas has been very successful

linked its brand with performance improvement.

A.C. 2.3 Relationship marketing activities implemented by Adidas &

evaluation of success of these activities

As explained by Borowski (2013, p. 21) and Sheth et al. (2000, pp. 41-44) Adidas have a high

emphasis on Relationship Marketing because it seemingly overlooks transactional marketing

where the emphasis is on a single product. The relationship marketing in Adidas follows two

approaches; the first one is the satisfaction of the customers and the second one is retentions of

the customers. Satisfaction of the customers is directly linked with communication and

acquisition of needs of the prospective customers just from the current customers. For Adidas,

this involves providing additional services or options or maybe even a discount policy in order to

increase the value offered by the product or service. Packaging and availability of the products

also have a major role to play in this perspective.

Smit (2008, pp. 34-37) describes that Adidas achieves customer retention via various practices

so that it is made sure that the customers continue to buy its products. Adidas uses retention

information in order to identify what type of product characteristics are essentials to gain more

customers and retain the current ones. Adidas’ activities for customer retention include valuation

of customers as per their financial and strategic importance, measurement of customer retention

which deals with the customer retention rate which is a simple percentage of the customers at

the starting of the year and that at the end, assessment of reasons of defection which cone be

done by analyzing the complaints and suggestions from the customers and making them the

benchmarks and last but not least creation and assessment of corrective plans.


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TASK 3:

A.C.3.1 Growth opportunity for Adidas using appropriate marketing

techniques

With the presence of major competitors, the footwear industry has developed a lot in the recent

times. Adidas face a stiff competition from the likes of Nike, Puma, Reebok and others. This

makes the market highly volatile and provides an opportunity for each of the players to improve

their market share and their current standing as researched by Sheth and Parvatiyar (2000, pp.

13-17). Adidas needs to understand that apart from ‘Green Sneakers’ there is an opportunity for

adaptive sneakers specifically designed for elder people. Despite all the growth none of the

competitors have focused their attention on the elderly market across the globe. By introducing

the adaptive sneakers, Adidas can gain the competitive advantage in this area as well which

can be very fruitful in its overall market position of the company (Adidas 2016).

As per a study by Smit (2008, pp. 129-135), there are approximately 40 million people in the US

with age 65 years or above while in the UK there are over 10 million elderly people according to

a study conducted in the year 2011. Research also suggests that in Australia there are

approximately 4 million people with age over 65 years and the number is nearly 30 million in

Japan for the population of the same group. China is also up for a huge grab with over 118

million people of the same age group. These numbers are dominated by the baby boomers and

will continue to grow in the coming years as well.

A.C. 3.2 Suitable marketing strategies for the selected market

As per Borowski (2013, pp. 29-30) the suitable marketing strategy here for Adidas is pushing

strategy for the adaptive sneakers as the brand will promote their products and create demand.

Due to the fact that one factor of a marketing plan can influence all other aspects as well,

therefore, coordination among the activities is essential for maximization of profits. Well

arranged marketing strategies will streamline the processes of products development, establish

effective distribution channels, help out in determining most suited product prices, assist in

developing efficient marketing communication systems which will ultimately amplify the overall

impact of the strategic plan.

Ojeda-Gomez et al. write that (2007, pp. 301-305) the designing and development of the

adaptive sneakers will increase the sales globally in the first year with help of appropriate

executions of marketing tactics. Because there is no competition in this area, therefore, the


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launch of the adaptive sneakers by Adidas will allow it to gain up to 80% market share which will

increase the overall share of the brand. With this launch, the brand recognition of the company

will also boost on a global scale and make it recognized as ‘All Ages’ brand. The company can

further modify the product line in the coming years as per the demand of the market by later on

focusing on producing sneakers for deformed feet as well. The target market here for Adidas is

the disable people and the company can focus on the populations of all above-mentioned

nations.

A.C. 3.3 Appropriate strategic marketing objectives for the new

market & a marketing mix to achieve this objective

To begin with, these adaptive sneakers must provide exceptional comfort to the delicate feet

and joints of the elderly people. In addition, these sneakers must also provide stability to lower

the chances of tripping. Some added features can also be provided in terms of therapeutic and

health benefits for the users as well (Nike 2016). Moreover, these shoes must also be designed

as per the latest trends making them fashionable too. From here on in, the promotion of these

product characteristics is very important. Initially, in the first year, the sneakers will look to

increase a number of sales by 20% across the globe which will increase the market share and

will boost the overall sales by over 25% due to the fact that the market is yet to be served by

anyone within the industry (Reebok 2016).

Shaw mentions that (2012, pp. 39-42) to make the most from the opportunity, Adidas should

blend the 4Ps of the marketing mix, which for the process of product innovation are product,

place, price and promotion. The product will include the high-quality adaptive sneakers, with a

high level of comfort plus efficient packaging. The organization should also make sure that

availability is at optimum level at all times. It needs to ensure that all variety of this line is

available everywhere. The prices of these sneakers should also create a win-win situation for

both the customers and company. The use of brand ambassadors as leverage luminaries is

integral in the promotion and can be used in this case as well.


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TASK 4:

A.C 4.1 Major changes that have occurred in external environment &

assessment of their impact on the marketing strategy of Adidas

As per Ojeda-Gomez (2007, pp. 293-297) the footwear industry’s external environment has

different significant factors that must be considered by Adidas before it launches its new product

range whether it is the Green Sneakers or Adaptive Running Shoes. The rapid global expansion

is an aspect that deserves attention. The footwear industry has reached different continents and

most of the products are distributed through retailers and market either as sports or fashion

products. This has increased the demand within the industry for more fashionable and

innovative products. Another aspect is that the overall focus of the market is tilted towards

young people across the globe as the prime customers.

Other than that, there are various economic, social, technological and political aspects to be

considered as well. Different global markets have lowered barriers to trade and WTO has also

been successful in convincing nations to reduce import and export limitations. Nevertheless,

many markets are still struggling due to the effects of the global economic crisis of 2007-08

which shows that customers have started to spend less on luxuries. This also relates to

increasing unemployment rates across the globe. However, the brand image of Adidas has

enabled it to increase its sales across the world through a new form of promotion such as social

media and online selling. This also makes the role of technology more important in the

development of this industry in the years to come as explained by Palmatier et al. (2006, pp.

139-143).

A.C. 4.2 Analysis of the Adidas’ current marketing strategy & its

strengths and weaknesses

According to Sheth and Parvatiyar (2000, pp. 119-123) there are different strengths and

weaknesses of the marketing strategy of Adidas for its Adaptive Running Shoes. As far as the

strengths go, the strategy will improve the market share of the company. Adidas is among the

leaders of the footwear industry in many areas which allow it to successfully promote the new

product line within the current environment. The company has a strong financial backup to

execute the current strategy for a positive outcome. Adidas has all the resources in forms of

research and technology as well which assists in innovating new processes and products. In

weaknesses, a major concern for the company is that the products are highly priced which is not


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suitable for the current market setup due to the recent global crisis as discussed by Miller (2004,

pp. 237-239). This might have a negative impact on the new product line and the related

marketing strategy.

Adidas can take the advantage of the opportunity at fullest because the market is still not

catered by any other major player and with the kind of resources Adidas has at disposal, the

brand can lead the market here. However, there are some companies who are looking to

venture projects in order to cater this market and a high price can become an issue for Adidas

because a lot of customers will look towards low-priced sneakers instead of high quality as

mentioned by Zeithaml (2010, pp. 144-145).

A.C. 4.3 Key emerging themes that can affect the Adidas’ marketing

strategy & responses to effectively address these changes

As per Borowski (2013, pp. 22-25) numerous changes can take place within the market if

Adidas introduces a new line of Adaptive Running Shoes hence it needs to identify and tackle

them. With the launch of Adaptive Running Shoes, the competition will be intensified as Nike,

Puma and Reebok will also look to introduce their own line of such sneakers for elderly people

and here the competition will only be topped by increased innovation and aggressive marketing.

Adidas has been involved in incidents linked with unfair labor practices and to undo this, the

company must carry out fair labor practices. The brand must also develop a contingency plan in

case of the failure of the current plan (Adidas 2016). From there the company can look for a

new diversified target market or devise a new plan for its new product line. Here the key to

success is that Adidas should develop products that are different from others and do not imitate.

Moreover, Adidas should look price this new line while keeping in mind the characteristics of the

customers as well. The recent economic crises have shifted the focus people to more price

convenient products. The products offered by Adidas are without the shadows of a doubt are

world class and high performing price should also be considered explains Smith in his work

(2016, pp. 727-728). The company can lower its cost by giving a boost to online sales because

this will reduce the costs associated with warehouse and involved middlemen. With this

approach, Adidas can take a major chunk of the global market in no time.


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Conclusion

Adidas is one of the key players in the global footwear industry and it has been very influential in

its marketing strategies by keeping them parallel with its corporate strategy. If it needs to

introduce a new product line and increase the market share then it has to evaluate all the

internal and external aspects that are linked to the target market which is the elderly people.


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Bibliography

Adidas 2016, Adidas Group, viewed 25 May 2016, <http://www.adidas-group.com/en/>.

Borowski, A 2013, 'Adidas Marketing Strategy - An Overview', Seminar Paper, International Business

School Lippstadt, GRIN Verlag.

Carbasho, T 2010, Nike, ABC-CLIO.

Miller, D 2004, 'Negotiating International Framework Agreements in the Global Textile, Garment, and

Footwear Sector', Global Social Policy, vol 4, no. 2, pp. 215-239.

Nike 2016, Company Profile, viewed 25 May 2016, <http://about.nike.com/pages/nike-inc-media-

resources>.

Ojeda‐Gomez, J, Simpson, M, Koh, SCL & Padmore, J 2007, 'Achieving competitive advantage in the

Mexican footwear industry', Benchmarking: An International Journal, vol 14, no. 3, pp. 289-305.

Palmatier, RW, Dant, RP, Grewal, D & Evans, KR 2006, 'Factors Influencing the Effectiveness of

Relationship Marketing: A Meta-Analysis', Journal of marketing, vol 70, no. 4, pp. 136-153.

Reebok 2016, Adidas Group, viewed 25 May 2016, <http://www.adidas-group.com/en/>.

Shaw, EH 2012, 'Marketing strategy: From the origin of the concept to the development of a conceptual

framework', Journal of Historical Research in Marketing, vol 4, no. 1, pp. 30-55.

Sheth, J & Parvatiyar, A 2000, Handbook of relationship marketing, CA: Sage Publications, Thousand

Oaks.

Smit, B 2008, Sneaker Wars: The Enemy Brothers Who Founded Adidas and Puma and the Family Feud

That Forever Changed the Business of Sports, HarperCollins.

Smith, L 2016, 'Two-stripe position mark held confusingly similar to Adidas three-stripe marks', Journal

of Intellectual Property Law, vol 10, no. 10, pp. 727-728.

Wilson, R 2010, Strategic marketing planning, Routledge.

Zeithaml, V, Bitner, M & Gremler, D 2010, Services marketing strategy, John Wiley & Sons, Ltd.

http://www.adidas-group.com/en/

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